The Case: Since TiVo launched in 1997, it has been consistently applauded. The company name is used by consumers as a verb (to "TiVo" a show is to record it for later viewing), and customer satisfaction is off the charts. But TiVo has never generated a profit nor come close to winning the number of customers it originally expected. The company is now on the brink of profitability -- but is also highly vulnerable.

The story of TiVo is a made-for-TV drama -- and a good one. Few corporate histories better illustrate the fact that companies can make groundbreaking products but fail to make money. In its eight years, TiVo has struggled with a fundamental weakness: to build its customer base, it has had to cede its customer relationships to its partners. That flaw has made TiVo vulnerable to the vicissitudes of the fast-changing market for broadcast media.